This is the first in our “How to start business” series. In it we discuss the fundamental principles you’ll need to make sure your business survives and prospers.
It may seem like a strange place to begin in a series about how to start a business but this is the fundamental question to ask yourself before you begin.
It’s unavoidable, you’ll be asked it again and again and again as you go through the odyssey of founding and nurturing your idea into a business, better to know that the answer is yes now before you take the plunge and find out that the answer is actually no.
I’ll answer to no one
Being your own boss sounds great doesn’t it? It might be the driving force behind your decision to go from employee to employer but it’s a fantasy, even the Pope has to answer to God and you will have not one but if you’re lucky many bosses. Your Customers are your employer and you’ll learn very quickly they’re demanding and fickle in their attachments.
Your employees are your bosses too, you’re responsible to them. You have to maintain and structure a business that can support them, develop them and retain them. It’s a lot of responsibility and potential for stress. If you’re going into this thinking the opposite will happen you’re going to be in for a rude awakening.
Show me the money!
I want financial independence. Who doesn’t? In general, most American millionaires are manager-owners of businesses. Having said that starting a business though is not the only way to attain it, in fact it’s a much riskier path to take than simply acquiring highly valued skills then leveraging your network to get a high salaried job from which you save and invest a percentage of your wages every month and build up your wealth that way.
What you’ll find when you start your business is that money will start going out more regularly than coming in and that the money coming in won’t catch up for a while and there’s a good chance it’ll never catch up. In fact an estimated total of 16,502 English and Welsh companies entered insolvency in 2016, a rise of 12.6% on the year before.
You have to always keep in mind you’re taking a risk and you could lose; the question then becomes what are you willing to lose to make your business a success. You should ideally have enough cash to cover at least six months cost of operation, going into this with unrealistic expectations of ROI will only lead to disappointment and potentially severe financial pain.
Does anyone want what you’re selling?
Everyone has ideas, you obviously have an idea that’s why you want to start a business but just because you think it’s a good idea doesn’t mean it actually is. Have you actually researched whether anyone wants what you’re selling?
If you haven’t then stop reading and do it now. Go to where your potential Customers congregate online or in person and ask them, you don’t get what you don’t ask for. You should research, research and research some more so you know that there is a market out there for you to sell to instead of taking big a risk on a gut feeling.
Time is money
“Someone is sitting in the shade today because someone planted a tree a long time ago”.
Time is a finite and precious resource, and in starting a business you won’t just be investing your money but your time. A business is a bit like a baby — it needs constant attention to survive. You need to have the motivation to see an idea through to fruition and to make the necessary sacrifices; friends and family might get less time. You have to think about these things and talk them through so all the relevant people in your life and most importantly you yourself know and are willing to accept them. You don’t want to have this discussion six months down the line when it’s too late to back out.
Are you social?
If a tree falls in a forest and no one’s around to hear it, does it make a sound? If you have a great product but no one knows about it do you have a great product?
Businesses are at their foundation social organisations, we hope a mutually beneficial trade is going on between two parties but before that happens a lot of personal effort has to be put in. As a business owner in many ways you’ll be the face of the business, you will be the one people from within and without look to for what the business is about and where it’s heading. You set the agenda and since it’s your idea no one else will be able to explain it and therefore sell it better than you.
If you’re not very social you’re going to have to fake it till you make it. This is especially true in the beginning when you won’t have a giant marketing department at your fingertips. From networking events to business meetings you’re going to have to learn how to be personable and as the face of the business you won’t just be selling the product but yourself in many ways. If you are liked and trusted then prospects will have greater faith in your products and services and to retain customers will require you to develop personal relationships with them based on trust.
Not everyone is suited for this and it can be very draining but you need to be prepared for it and constantly work at it.
Stephen Hawking may be very smart but I doubt he knows the intricacies of extreme ironing, likewise you are unlikely an expert in all fields therefore it pays to have advisors and mentors, people who are smart off of whom you can bounce ideas and find solutions to problems they have faced before.
It might boost your ego to solve a difficult problem but it’s much more efficient to use an existing solution from someone else that gets the job done, that way you can focus on other important tasks. Building relationships with people smarter and more successful than you will prove to be a valuable resource and hopefully as you and your business grow and develop you can in future become a resource to those same mentors and others.
Nothing is perfect, it is wise to spend time testing and planning to create the best product or service possible but you can over do it and lose sight of the main goal of getting a product to customers. There’s nothing to stop you from continuing to develop a product that’s already in the market, in our case what RealtimeCRM first looked like when it was released to what it is today; it’s almost a completely different product but we got it out there and it was immensely useful getting that real world feedback and iterating it into our product through updates.
If you spend all your time and money on getting the product ‘perfect’ and losing sight of the fact that you’re running a business and you have to have something to sell you won’t succeed.
At this point you’re probably wondering why anyone would want to start a business? Well, good question and we can ask our very own Phil Mashinchi (our founder), a man who has founded not one but two different businesses. If anyone has the answer he does.
So Phil why did you start your first business, was money the primary motivator?
As much as I like the better things in life, no, it was not money driven at all. I had a great job working for one the UK’s top IT service providers and by chance spent my spare time helping a friend with his business IT needs. After a number of months of helping my friend he made the following comment to me “I keep paying my service provider and you are the one that fixes all my issues. Would you mind if I stopped paying them and paid you instead and in return you continue looking after my business”. And that was the start of it all…
What challenges did you face that you weren’t expecting?
I was a good experienced technical person but knew nothing about running a business. As my business grew I ended up spending more and more of my time on other tasks such as sales, admin and accounts leaving less and less time doing what I was good at.
What motivated you to keep spending your time and money on the business when things weren’t going well?
What drove me forwards was the pleasure of making a difference. I must admit there were a few sleepless nights when I did not know how I would be able to pay my team. Giving up was not an option in my books and I simply had to find a way through.
What are the best aspects of running a business?
Many of my customers, suppliers and staff have become great friends which means a lot to me. I also get great satisfaction to watch my team work and know that my actions have provided them with employment at a place they enjoy.
Finally, if you had to start over today knowing what you know would you still start a business?
Absolutely. I do not believe running a business is for everyone. I have met many business owners that do not enjoy what they do and would get out of it if they could. I am fortunate enough to enjoy the challenges of running and business and am involved in a number of them.
Originally published at realtimecrm.co.uk on October 30, 2017.